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Most of the financial products are by their very nature complex, having a long list of benefits, terms and conditions.

Ask the provider or your financial adviser the following questions about a financial product, to understand it and decide whether to buy it:

1. What are the benefits?

The benefits can be about the safekeeping of your money, the convenience of not having to carry cash, the ability to buy an asset of substantial value, growing your money, covering expenses or paying out a lump sum when certain events occur.

Are the benefits tangible or unattainable?

2. What are all the costs, and how do costs change over time? Is the cost once-off, or, as in the case of most financial products, monthly or annual?

Will the costs increase with inflation, change with the interest rate, remain the same, or decrease over time?

Are there hidden costs? Ask for the costs in percentage terms, as well as in rand.

Are the benefits I will receive from the product worth the cost?

3. What is the term (duration)? Is it month-to-month, one-year, five-year, 20-year, or for life?

Can you afford the cost in later years?

4.Is it simple to understand?

There are a lot of details you need to understand about a financial product, but is it simple to understand, or is it quite complicated, with many moving parts?

5. Is it flexible? When can you upgrade or downgrade?

Can you make changes to the product? Can you cancel the product at any time?

Are there penalties for early cancellation?

What is the notice period for cancellation?

6.Is it doing social good? More and more people are asking this question.

It’s not just about personal benefit, but whether a certain product also has a social or community benefit.

7.Your service level: What is your turnaround time on a query, a complaint, a claim?

One day, three days, a week or a month?

Do you have an online portal I can log in to?

Do you have an app that allows me to interact with you and my financial product?

Do you have a call centre? Will I have a dedicated consultant?

8.Tell me the bad stuff: Such as what’s not covered, what’s not paid, exclusions, do I lose everything if I miss a payment? What if I can’t keep up with the payments due to changes in my circumstances?

This article is part of our April 2018 Collective Insight supplement, which appeared in the 26 April edition of finweek. To download the entire supplement, click here. Buy and download the magazine here. Subscribe to our weekly newsletter here.